GM profit dips as revenue rises; European sales a sore point

The nation’s largest automaker said it earned $1.7 billion, or $1.03 per share in the quarter. That compared to a profit of $2 billion, or $1.20 a share in the same period a year earlier.

Revenue rose 7.6% to $36.7 billion.

“GM delivered a solid quarter thanks to our leadership positions in North America and China, where we have grown both sales and market share this year. But solid isn’t good enough, even in a tough global economy,” said Dan Akerson, GM’s chief executive. “Our overall results underscore the work we have to do to leverage our scale and further improve our margins everywhere we do business.”

GM is still losing money in Europe but is profitable in North America and is running at the break-even level or better in the rest of the world.

The report continues a string of seven profitable quarters for GM, which emerged from a bankruptcy reorganization and federal government bailout in 2009. On a fully diluted basis -- which accounts for stock options and warrants in the marketplace not yet exercised, taxpayers still own about 27% of the automaker.

And with the news, GM's shares fell $1.70, or nearly 7%, in early trading to $23.34. The stock is almost $10 off its initial offering price of $33 of last November, when it started trading following the automaker's financial restructuring.

GM's financial results were helped by it spending less money to get buyers into its vehicles. Discounts and incentives for the third quarter were 15.5% less that the same period in 2010, according to auto information company Edmunds.com. So far this year, the company is spending about 8% less on sales incentives, according to Edmunds.com estimates.

At the same time, GM is solidifying its place in the auto market.

GM has grown its market share to 20.1% in the third quarter, up from 18.6% in the same period a year earlier, according to Edmunds.com.

Part of the gain comes from the supply crunch suffered by the big Japanese automakers after the that nation's earthquake in March.

The shortage of Japanese brands of cars -- especially Toyotas and Hondas -- allowed GM to cut back on incentive spending, said Jessica Caldwell, an Edmunds.com analyst.

"The addition of compelling products like the Chevy Cruze also contributed to their success," Caldwell said. "But with their Japanese competitors re-emerging, GM will have a tougher fight on their hands in the coming months against refreshed and redesigned offerings like the Toyota Camry and Honda Civic.”